Code Section Group

Revenue and Taxation Code - RTC

DIVISION 2. OTHER TAXES [6001 - 61045]

  ( Heading of Division 2 amended by Stats. 1968, Ch. 279. )

PART 11. CORPORATION TAX LAW [23001 - 25141]

  ( Heading of Part 11 amended by Stats. 2001, Ch. 543, Sec. 21. )

CHAPTER 2. The Corporation Franchise Tax [23101 - 23364a]

  ( Heading of Chapter 2 amended by Stats. 2001, Ch. 543, Sec. 26. )

ARTICLE 4. Commencing Corporations [23221 - 23226]
  ( Article 4 added by Stats. 1949, Ch. 557. )

23221.
  

(a) Any credit union that incorporates under the laws of this state or qualifies to transact intrastate business in this state shall thereupon prepay a tax of twenty-five dollars ($25) as provided in Section 23153. The prepayment shall be made to the Secretary of State with the filing of the articles of incorporation or the statement and designation by a foreign corporation. The Secretary of State shall transmit the amount of the prepayment to the Franchise Tax Board. The Franchise Tax Board shall certify to the Secretary of State on an individual or class basis those domestic or foreign corporations that are exempt from prepayment or for which prepayment to the Secretary of State is waived.

(b) This section shall become operative and apply beginning on or after January 1, 2001.

(Repealed (in Sec. 2) and added by Stats. 1999, Ch. 64, Sec. 3. Effective July 6, 1999. Section operative January 1, 2001, by its own provisions.)

23222.
  

(a) If a taxpayer commences to do business in this state during its first taxable year its tax for that year shall be adjusted upon the basis of the net income received during that taxable year, at the rate applicable to that year, a credit being allowed for the prepayment of the minimum tax. The return for the first taxable year, which shall be filed within 2 months and 15 days after the close of that year, shall also be the basis for the tax of said taxpayer for its second taxable year, if its first taxable year is a period of 12 months. In every case in which the first taxable year of a taxpayer constitutes a period of less than 12 months, or in which a taxpayer does business for a period of less than 12 months during its first taxable year, said taxpayer shall pay as a prepayment of the tax for its second taxable year a tax based on the income for the first taxable year computed under the law and at the rate applicable to the second taxable year, the same to be due and payable at the same times and in the same manner as if that amount were the entire amount of its tax for that year; and upon the filing of its tax return within 2 months and 15 days after the close of the second taxable year it shall pay a tax for said year, at the rate applicable to that year, based upon its net income received during that year, allowing a credit for the prepayment; but in no event, except as provided in Section 23332, shall the tax for the second taxable year be less than the amount of the prepayment for that year, and said return for its second taxable year shall also be the basis for the tax of said taxpayer for its third taxable year, if the second taxable year constitutes a period of 12 months.

(b) The provisions of subdivision (a) shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

(Amended by Stats. 1971, 1st Ex. Sess., Ch. 1.)

23222a.
  

In every case in which the second or succeeding taxable years of a commencing taxpayer constitute a period of less than 12 months or in which the taxpayer does business for a period of less than 12 months during its second or succeeding taxable years, the tax for such year or years shall be measured by the income of that period or periods subject to the continuation of the prepayment procedure outlined in Section 23222. In no event shall the income of any period or periods herein described be used as the measure of the tax for the succeeding taxable year, other than the prepayment, until the last short period is succeeded by a taxable period of 12 months, in which case the income of the last short period shall, if greater than the income of the 12-month period, constitute the measure of the tax for such 12-month period.

Thereafter the procedure outlined in Section 23222, in respect of the second and third taxable years, shall apply and the taxpayer shall not be subject to the provisions of this section.

In the event that a taxpayer is dissolved or withdraws from this state while subject to the provisions of this section, its tax for the year of dissolution or withdrawal shall be measured by its net income for such year. However, in no event shall the tax be less than the minimum tax provided by Section 23153.

The provisions of this section shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

(Amended by Stats. 1971, 1st Ex. Sess., Ch. 1.)

23223.
  

(a) When any taxpayer commences to do business in this state for the first time in any taxable year other than the year of incorporation or qualification, its tax for that taxable year and for the succeeding taxable year shall be computed in accordance with the provisions of Section 23222 relative to first and second taxable years, a credit being allowed for any tax payable under Section 23153 for the year in which it commences to do business.

(b) The provisions of subdivision (a) shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

(Amended by Stats. 1971, 1st Ex. Sess., Ch. 1.)

23224.
  

(a) Notwithstanding the provisions of Section 23222 and Section 23223, if a corporation, which has been subject to the provisions of Chapter 3 commences to do business in this state, its tax shall be computed as follows:

(1) Such corporation shall pay a tax under Chapter 3 for the whole of the year it commences to do such business;

(2) Such corporation shall, for the taxable year succeeding the year it commences to do business in this state, pay a tax under this chapter measured by its income for that taxable year;

(3) Such corporation shall, for its third taxable year, pay a tax, under this chapter, measured by its income for its second taxable year;

(4) Notwithstanding any other provisions of this part, such corporation shall file its return for such second and third taxable years on or before the 15th day of the third month following the close of its second taxable year.

(b) The provisions of subdivision (a) shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

(Amended by Stats. 1971, 1st Ex. Sess., Ch. 1.)

23224.5.
  

(a) After December 31, 1971, if a corporation which has been subject to the provisions of Chapter 3 commences to do business in this state, such corporation shall pay a tax under Chapter 3 for the whole of the taxable year it commences to do such business.

(b) For the purposes of Sections 23151.1 and 23183.1, the first taxable year subsequent to the taxable year the corporation commences to do such business (as described in subdivision (a)) shall be treated as the taxable year of commencement.

(Amended by Stats. 1977, Ch. 552.)

23225.
  

The adjusted tax, as provided in Sections 23222 to 23224.5, inclusive, for any taxable year in excess of the prepayment for that year, shall be due and payable as provided in Article 2 (commencing with Section 18601) of Chapter 2 of Part 10.2.

(Amended by Stats. 1993, Ch. 31, Sec. 34. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

23226.
  

In the case of the taxpayer taxable in the manner provided in Sections 23222 to 23224.5, inclusive, reporting income from any source on a deferred basis, the Franchise Tax Board is authorized to distribute or apportion such income, or deductions applicable thereto, if it determines that such distribution or apportionment is necessary in order to prevent avoidance of taxes or clearly to reflect the income of the taxpayer.

(Amended by Stats. 1977, Ch. 552.)

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